Monthly Archives: September 2012

Rick Hanna jumped into the deep end of the pool nearly two years ago when he was appointed Executive Vice President of Sales and Marketing of Dex One Corporation, responsible for all sales and marketing functions. Hanna did have the advantage of extensive background from the technology and telecom sectors to help him navigate a company and sales organization in the midst of monumental change, all within an industry undergoing equally significant transformations. With responsibility for leading the company’s transition from a product-centric to a customer-centric organization, the company is moving quickly to transition from a mostly print centric publisher to a provider of a wide range of print and digital products.

Most recently, Hanna served as President and CEO of RRA Partners LLC, working with companies focused on broadband network deployments. Prior to joining RRA Partners, Hanna served as Chief Operating Officer at Motive Inc., where he led the sales, marketing, operations and product development functions. He has also held a variety of senior leadership positions at at AT&T, Cidera, the small/medium business division at MCI, MFS-Intelenet, and Teligent.

We recently had a chance to sit down with Hanna at the SMB Digital Marketing Conference, to discuss his insights on the changing realities of selling advertising to SMBs, the challenges of reshaping Dex’s sales organization, and the pending merger of the company with SuperMedia. Obviously there were a number of areas specific to the merger with SuperMedia that Hanna could not discuss, but I think you will enjoy some of the insights he could provide. And we even didn’t hold it against him that he is a graduate of the University of Central Connecticut.

YPT: Have you found any surprises since you joined industry nearly two years ago?

Hanna: One of the first surprises was that yellow pages was actually a growth industry as recently as 2007, so the market is shifting rapidly. Now it’s a constantly evolving market. As I said in my presentation this morning, if you believe you’ve caught up, you’re probably still in denial. But back to your original question, I’ve found it’s really not much different from other industries I have worked in such as the AT&T Long Distance SMB division. The cultures were very similar.

YPT: How long was merger with SuperMedia in the works?

Hanna: We originally started discussions last fall. They kind of quieted down over the winter, but then started up again seriously this spring.

YPT: When do you think the merged group will be able to get things turned around and begin so see increase revenues, and ongoing profitability?

Hanna: I can really only speak to the trajectory Dex One is on. We had been seeing strong growth of upwards of 50 percent in our Digital product revenues recently. The combination of our Dex Bundles, Dex Guarantee Actions (DGA) and digital growth, has us on a trajectory to turn positive by 2015.

YPT: Was the shift from print to digital products as much an issue caused by the poor economy, as it was market demand?

Hanna: We have gotten more aggressive with our digital products as our customers have become savvier as to how to use these digital products. More and more SMBs are beginning to grasp the importance of leads and not worry about the platform that generates them. They know their customer base is changing and shifting but they aren’t sure how much or where they are moving to. Most business owners know they need have some presence on Google with at least a $200-$300/month investment.

YPT: So why then is Dex One best positioned to capitalize on this shift?

Hanna: The exciting thing is there really is no dominant, “700 lb. gorilla” in this space. There are a lot of smaller players trying to serve SMB with a variety of products, but only a few have the full product suite that Dex One offers. Even more important is the long standing relationships our sales force has with our SMB customers. They have depended on us for years to help market their businesses. Now, with our digital portfolio and bundles they are trusting Dex One for print and digital services.

For Dex One to be successful, we first needed to build the system and support structure to handle the new products. We also needed a revised, sharpened hiring focus, in order to make sure our sales force better matched our current market opportunity. We are hiring more digitally savvy sales people, including New Business Hunters, which is different for Dex One. This process took time to get in place across our national sales force. It took us about 4-5 months to really gain momentum in refreshing our sales force. We have learned a lot and now have over 1,000 new sales people in our force, representing a 60% refresh over the past two years.

The combination of the investment in digital products, our 21st Century sales force, and sales automation tools have really paid off for us in 2012. Our Digital grow will be around 40% for 2012, and our bundle penetration will achieve our target of 60% of our revenue in Dex Bundle, including our Dex Guarantee Actions product. Currently, we are running above 70+% penetration on our bundles, which means better retention, increased revenues and a very solid base to sell more new products to our customers on an ongoing basis.

We have also changed “ how” we call on our customers. In the past, our sales cycle was more of an annual basis, tied to the print cycle of the directory. Now, we are calling on our customers on a continual basis. We call it “1, 3,7, 11” – which are the first, third, seventh, and eleventh months of an annual cycle. We measure their results, sit down and review product performance, and in general, provide a higher level of service to our customers. This requires our sales force to be more efficient. This is where our efforts on sales force automation, especially delivering automated proposals on the sales reps iPads, makes a big difference.

Additionally, we have a sophisticated, search platform that really sets us apart; our DexNet platform, which sometimes internally is referred to as “science project that went well.” We have a team of algorithmic PhDs in Santa Monica working on improving our platform each day. It is more than a full time job to keep up with the myriad of changes that Google, Yahoo, and others make to their algorithms on a constant basis. This business is just too complicated for small boutique digital consultants or agencies to effectively serve the typical SMB customer, who spends $300-$500 a month on their digital marketing. Our biggest competitor in SMB is this local digital consultant, or as we call this segment “I got a guy.” With the market changing as fast as it is, we truly believe the best-informed marketing consultant/sales representative will win the day in the SMB marketplace. This is again the reason why we are investing in comprehensive, multi platform training for our sales and support teams.

YPT: How have you changed the profile of the sales people you are recruiting?

Hanna: We found that just having multiple years of digital background wasn’t enough, especially if you are missing the core selling skills. Making sure you are matching their skill set to the specific job is critical. Base retention sales is very different than new business prospecting. We had to make sure we were recruiting the right skill for each of our positions. Even with an improved hiring profile in sales, we still have to expect that a 30% turnover is normal in large SMB sales forces. This is part of the culture change as well. We have to be able to balance our sales relationships with our customers, in conjunction with the transformation to a cutting edge, marketing services sales force.

YPT: With this expanded product set, are the days of the one call close gone?

Hanna: Fading, maybe not totally gone, but heading that way.

I do believe the bigger change is the multiple call plan I mentioned earlier. By servicing our customers during the year on a more regular basis, the renewals and new product sales happen more organically.

For new business, we are training to be more prepared going into the first call. Plus, with our automated proposal and presentation tools on the iPad, we can accomplish a lot more on the first call.

Our goal is to be as efficient as possible, as the old saying goes, “time is money.” Bottom line, we want to make sure our customers and prospects alike fully understand our value story, and are confident in their purchase decision with Dex One.

MAJOR APPLIANCES. The US major appliance market shrank 5.1% in 2011, down to $19.1 billion – but appliance retailers appear to be bulking up on their inventories, especially on high-end units such as $7000 refrigerators and $1200 washing machines, but also on lower priced units as well. This all seems counter-intuitive – but according to the source article, although sales are down, prices are holding steady and still offer dealers relatively high margins, enough to do a lot of promotional selling. While promotions are a large part of the appliance industry, retailers should not forget that many prospective buyers have a need when there’s no promotion on and will check the YP (Wall St. Journal, 8/1/12).

CHILD CARE INDUSTRY. It’s close to a $50 billion-a-year market in the US. The trend seems to be moving toward franchising, but it’s still composed mostly of independent providers. The fact is, both segments are likely to grow, as experts predict a 9.2% annual growth rate. Right now, some 14.4 million US children are in some form of child care, and 65% of US mothers with children under age 6 are in the workplace. Finally, even though US birth rates have been down the last few years, there are still 3.94 million births per year – so there’s still good reason for child care centers to advertise (Entrepreneur, 8/12).

CONFIDENCE FACTORS. Based on the truism that a rotten apple can taint the others in the barrel, advertisers in some of the most important YP categories may do well to beef up the reliability or confidence factors in their advertising. Specifically, from 2010 to 2011, written complaints rose 32% for attorneys, 29% for restaurants, 26% for real estate agents, 22% for specialist physicians, and 17% for movers. Regarding the latter, the biggest complaint was charging substantially more than the estimate and then “holding the householder’s belongings hostage” until they pay the charge. Legislation against this tactic has already been passed, but the taint remains (Smart Money, 8/12; USA Today, 7/30/12).

Find out how to be at the top of your sales performance by clicking on www.kukbaldwin.com.

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Other recent media/advertising news: You will notice this version of News U Can Use is very digital centric. There seems to have been an explosion of media advertising news recently, and it is just about all focused on the online, mobile, and social spaces. So, here are some of the more important ones for this industry:

U.S. digital-ad revenue projected to rise 16.6% this yearAccording to an eMarketer estimate based on Interactive Advertising Bureau/PricewaterhouseCoopers data, Google is leading an expected 16.6% rise in digital ad revenue this year. The top five players which include well know entities such as Yahoo!, Microsoft, Facebook and AOL, will account for about two-thirds of the year’s projected $37.31 billion. Search and display will continue to dominate the ad formats through 2016, per eMarketer. (Source)

U.K. small businesses don’t understand their social successes eitherIt really just isn’t a US SMB issue. According to a Constant Contact survey owners of many U.K. small and medium-sized businesses have unrealistic expectations for their social media campaigns. For example, almost a quarter of those polled said they’d consider a piece of content on Facebook a success only if it sparked 500 or more interactions. But Constant Contact’s Annette Iafrate says tangible results can be achieved with far fewer interactions. (Source)

Company finds 80% of Facebook ad clicks come from bots not peopleAnother company has indicated it is pulling its ads from Facebook and moving some to Twitter. Why? The company, Limited Run, has found evidence that 80% of ad-clicks were being generated by automated “bots” rather than human users. The company built a custom analysis tool to monitor its ad campaigns after becoming frustrated with the limits of Facebook’s own tools. The company says its custom tool found that only 1 in 5 clicks on its ads appeared to come from legitimate sources. (Source)

BIA/Kelsey: Daily deals are a $3.6B industryAt its recent SMB 2012 conference, BIA/Kelsey projected that Americans are expected to spend $3.6 billion on digital daily deals this year, up 87% compared with last year. The analyst group indicated they project the industry should swell a further 23% next year, en route to $5.5 billion in 2016. Vice President and Program Director Peter Krasilovsky said that “after astronomical growth in 2012, the online deals marketplace is showing signs of maturity.” (Source)

Twitter to offer interest-based ad targetingComing to a tweet you read, target based advertising. Brands will soon be able to target ads to Twitter users based on the interests they reveal in their tweets and in the network of other users that they follow. Advertisers will be able to use that data to target ads, in much the same way that Facebook advertisers can target promotions based on a user’s likes, officials said. “This has been one of the most interesting things that Facebook has had to offer to advertisers. For Twitter to do their own version makes sense,” says Jonathan Strauss of Awe.sm. (Source)

MediaMind: Video ads have killer click-thru ratesA MediaMind study is indicating that online video ads are generating remarkably high click-thru rates, with some formats proving more than 28 times more effective than standard banner ads. In-stream VAST-format video ads had a click-thru rate of 2.84%, versus 0.22% for rich-media ads and 0.10% for a standard banner, researchers found. (Source)

Mobile is the current advertising media rage. Here are three recent news items:

U.S. is emerging as global leader in mobile ad spendingThe U.S. is poised to overtake Japan this year as the world’s leading market for mobile ad spending, reaching $2.29 billion in total outlays, compared with $1.16 billion in 2011, according to eMarketer. Mobile advertising is growing faster in North America than in the Japanese markets, because the Japanese markets are more mature. The Canadian market is expected to be worth about $110 billion this year, the firm notes. (Source)

Mobile advertising is limited by small screens, weak tracking toolsHowever, despite all the excitement about mobile, advertising on smartphones leaves plenty to be desired, experts say. The NY Times reported that tracking tools for mobile are far less effective than their desktop equivalents, and tiny screens aren’t well-suited to creative ad campaigns. “Size absolutely does matter,” says Christine Chen of Goodby Silverstein & Partners. “If you look at the real estate available on a smartphone, it’s really sad compared to not just banner ads on the Web, but also to TV, print and outdoor advertising.” (Source)

Study: Ads to account for 23% of mobile-app revenuesApps are the really, really hot thing within mobile right now. Dig a little deep and you find some interesting things: Advertising will account for 23% of mobile-application revenues this year, an increase from 18% last year, according to a Flurry study. Ad revenues from mobile apps will total $2 billion in 2012, more than double the 2011 figure, the study reports, although most revenues will continue to come from paid apps and in-app purchases. (Source)

The last word:

Merged company headquarters will be located in Dallas

To wrap things up, here is some late breaking industry news. Not surprisingly, the News & Observer newspaper has reported that the upcoming merger between North Carolina-based Dex One and SuperMedia will cost the Raleigh area a corporate headquarters.

The two yellow pages publishers, which announced their merger last month, have decided that the combined company’s headquarters will be based in Dallas, the home base of SuperMedia, according to an internal announcement obtained by The News & Observer.

“Working together, the leadership teams of Dex One and SuperMedia have determined that the best location for our headquarters will be at the current SuperMedia headquarters complex at the Dallas-Fort Worth airport,” stated an e-mail message that went out to employees recently signed by the CEOs of the two companies, Dex’s Alfred Mockett and SuperMedia’s Peter McDonald.

We are entering a busy industry conference season starting next week with the BIA/Kelsey SMB Digital Marketing 2012 conference, which takes place Sept. 17-19, in Chicago. Time is running short to join the digital marketing community, which is gathering to discuss the incredible SMB marketing opportunity for media, commerce, and engagement solutions. As of this point BIA/Kelsey has assembled an impressive lineup of nearly 50 speakers from across the SMB digital marketing space, including keynoters from Demandforce/Intuit, Constant Contact, Dex One, Facebook, Groupon and ReachLocal and featured speakers from Google/Wildfire, Deluxe, Yelp, Angie’s List, Belly, and many more.

YP Talk is looking forward to a conference program which is designed to provide valuable takeaways with topics that include local sales strategies, merchant outreach, SMB engagement/promotions, local search, social media and mobile strategies. This conference historically offers the rare opportunity to meet with leaders in the SMB digital marketing solutions space. Organizers are expecting more than 400 senior executives from over 150 companies at the conference. To see the current list of companies attending go to: http://www.biakelsey.com/SMBDigital/companies.asp.

Save some money: LinkedIn members who are also BIA/Kelsey group members can receive an additional $200 off the registration price by using the promo code SMBIN when registering.

For a more international flavor, consider attending the 2012 ADPAI Annual Conference in Bangkok on November 5-6, 2012. This event being run by the Asian Local Search and Media Association (ADPAI) will have major players in the local search and media space for the

The agenda is focused on the regional opportunities arising from the explosive growth that the social, local and mobile spaces have been experiencing in Asia. We can verify there is a lot of action in Asia as we found in our interview with ADPAI Chairman – Oscar Sousa Marques, the CEO of Directel Macau yellow pages (full interview here).

Session discussions will also include how to re-train and reorganize your sales force so to effectively sell digital media, how to identify and make the most of opportunities that lie in mobile advertising, how regional companies can use social media as a tool for acquiring and maintaining customers, and much more.

The ADPAI event is then followed by the Yellow Search Today! Annual Conferencewhich will be held November 14-15, 2012 in Hamburg, Germany. Peter Ch. Buxton of Buxton Independent Consulting and Jesper Simonsen of J.S. Consulting ApS, who combined more than 30 years of operational and practical experience in the directory markets of Europe, have changed the events focus somewhat to the broad market of operators offering online, digital and mobile advertising services to the small and medium–sized business.

This event will have a theme of how to drive revenue by effective customer segmentation:

Which products do we offer to which segments?

How does segmentation increase the salesperson’s credibility?

How do we put segmentation into action?

It is also an event which provides attendees with a great opportunity to meet fellow industry colleagues and develop new relationships.

I’m back from a week’s vacation and have a collection of news tidbits accrued during my travels that further highlight why this industry needs to take a step back and sort through all the recent noise about how Yellow Pages is really being viewed by consumers and small business owners.

The first data point actually has nothing to do directly with the Yellow Page industry, but in another way, does. This comes from Hollywood — reports indicate that ticket sales at North American cinemas declined an estimated 3%, to $4.28 billion, for the period from the first full weekend in May to Labor Day, compared with the period a year earlier (source). The culprit – it is the economy, stupid. This recession/depression/high unemployment (or whatever you want to call it) economy continues to just drift along like a boat without a rudder or engine. So while a lot of “experts” are pronouncing the end of the Yellow Page industry due to declining revenues, in reality many small business owners are still suffering and fighting through lower sales from prior years. In the case of consumers, when incomes are down and unemployment is up, things like spending on going to the movies are one of the first casualties. Yet I don’t see “experts” viewing that as a sign of the imminent collapse of the movie theatre business. But somehow slow Yellow Page advertising sales in this down economy are consider the start of a death knee. Really?

Data point two is a similar economy indicator and industry comparison point. FedEx has just issued a profit warning due to weak global economy (source). The company slashed its FQ1 EPS forecast to $1.37-$1.43 from an earlier estimate of $1.45-$1.60 and the current period could represent FedEx’s first quarterly decline since 2009. In its comments, the company indicated that “…weakness in the global economy constrained revenue growth at FedEx Express more than expected in earlier guidance.” Once again, I don’t think any “expert” is viewing this dip in earnings as a signal of the demise of express mail services due to what FedEx said. Simply put, the economy just plain sucks right now. There are some bright spots out there, but overall the economic funk continues.

Data point three has two parts – the first is the realization that the value of Facebook has now dropped some $40 BILLION since its IPO. Let’s combine that with the news that more bad news from digital “experts” darling Groupon where several of the co-founders of CityDeal, the Samwer-backed European clone that was acquired by Groupon in 2010, have decided to depart the company. These aren’t the first defections of senior management from the company. The key question for this data point — if all of these new digital advertising media are such great deals for SMB’s, shouldn’t these flagship digital providers be raking in the cash, and not be looking like sinking ships listing badly to port?

Which brings me to the next data point – the continuance of bogus Yellow Pages billing. Rarely does a week go by that I do not see at least one warning about bogus Yellow Page billings being sent to small business owners. For example, here is one in San Francisco, and another in Amarillo just this past week. What I find interesting about these schemes is that if SMB’s are so disenchanted with Yellow Pages advertising results, how could they be so naïve to then pay an incoming bill, just because it has a Yellow Pages logo of some type on it? Despite what online and social media “experts” say, could it be that those old fashion print Yellow Pages still bring leads/business to their doors?

The answer to the last question is still a resounding “YES”. Here is another recent study initiated by Haines Publishing, which found that 80% of residents in Ross and Pickaway Counties, Ohio use the print yellow pages first when looking for local business information (source).

When you add all of this up, it indicates that right now, this crappy economy is affecting all advertising. And it also indicates that SMB’s should not give up their print Yellow Pages positions just for a less expensive (sometimes), sexier (perception vs. reality), new digital platform, especially without verifying that the new digital advertising effort is going to yield the same quality leads that print still generate. Perhaps the solution lies not in a print OR digital discussion. Instead, it should be a print AND digital solution for SMB’s. Sure, get a nice website up, play with Twitter, Facebook, Groupon, or whatever. However, don’t give up your core position in print Yellow Pages, not when we are seeing call tracking results up over 15% YOY. Why would any SMB want to take the risk of losing any business in this current economic climate?